BSH: Investment in Cambodia

Birmingham Sports Holdings have today announced that they are to buy a company in Cambodia. The investment will see BSH own a stake in a mixed office and residential development along with building an international school. Furthermore, the investment will see a new company own a substantial stake in BSH and by extension BCFC.

The announcement is a lot to take in, but there are a few salient points to note.

There will be a new significant shareholder of BSH (and by extension BCFC). This will be a company called GRED (Graticity Real Estate Development Co., Ltd.). Their website is here.

The way the deal works is that for the piece of land and company they are getting, BSH are selling a part of themselves – in essence a new business being reversed in.

Should the deal be approved at an AGM, GRED will own 24.90% of BSH while TTA‘s piece will be reduced to 45.65%.

What this also means is that if anyone owns more than 50% of GRED they will have to take the Owners and Directors Test as they would indirectly own more than 10% of BCFC.

As of this moment I cannot find out who owns GRED but I am expecting a disclosure to be made to the HKSE which will determine any significant owners and would tell us more.

The newest director of BSH, Hsiao Charn Geng, has recently worked in Phnom Penh and it would be my hunch that he has been appointed to the board as part of this deal.

So what does this mean for BCFC?

The main thing I am taking from this announcement is the confirmation in my belief that Paul Suen Cho Hung was never interested in BCFC, and that he bought BIH (as was) for the company listing.

What I think we are seeing here is phase three of Suen’s ownership. Now the company is bought and stabilised, the next step is to bring in the business that will take over the listing.

I believe that this Cambodian project is that business, as a HKSE listing will give them access to finding new investment for their project without subjecting them to an IPO.

I also think that the next phase will be the sale of BCFC by BSH to another party – potentially someone connected with Ren Xuandong. I firmly believe that this next transaction will take place shortly after the October 2018 date that they have to hold onto BCFC until.

Is this good news for BCFC?

I’m going to stick my neck out here and say yes it is. If BSH diversifies it’s business and brings in another way for the company to make money, it means the holding company is less dependent on BCFC to be profitable.

Likewise, I think the separation of BCFC from the HK listed company to an entity that potentially wants it for footballing reasons is also good news.

What happens next?

This all has to be approved by an EGM of the company, which has not got a date set yet. I’m guessing as that approaches we will learn more.